USD/CHF extends its upward momentum for a third straight session, trading near 0.8010 during Monday’s Asian hours. The pair is being supported by renewed demand for the US Dollar, driven by heightened geopolitical tensions in the Middle East that are pushing investors toward safer assets.
Uncertainty has intensified following recent developments involving Donald Trump, who set a deadline for Iran to reopen the Strait of Hormuz while issuing warnings of potential strikes on critical infrastructure. In response, Iranian officials signaled they would retaliate against US-linked assets and maintain the closure of the strait until compensation demands are addressed. This standoff has fueled market anxiety, boosting the appeal of the US Dollar and lifting USD/CHF.
That said, the upside for the Greenback may remain somewhat contained. Reports suggest that the United States, Iran, and regional intermediaries are exploring the possibility of a temporary ceasefire. While expectations for a near-term agreement remain low, even the prospect of de-escalation could temper safe-haven flows and limit further gains in the pair.
At the same time, rising energy prices are adding another layer of complexity. Higher oil costs are increasing concerns about inflation, which could influence the policy stance of the Federal Reserve. Market participants are beginning to consider the possibility that the Fed may delay rate cuts or even lean toward tightening if inflation pressures persist. Attention is now turning to the upcoming Federal Open Market Committee minutes for clearer signals on the policy outlook.
On the Swiss side, recent data has reduced the urgency for policy adjustments by the Swiss National Bank. Inflation rose modestly to 0.3% year-over-year in March, marking a one-year high but still remaining near the lower end of the central bank’s target range. This subdued inflation environment allows the SNB to maintain its current stance without immediate pressure to act.
Overall, USD/CHF remains supported by geopolitical uncertainty and shifting monetary policy expectations, though any signs of easing tensions could slow the rally.
Trade Idea:
Buy USD/CHF on dips toward 0.7980, targeting 0.8070, with a stop below 0.7930, as safe-haven flows and Fed expectations continue to support the pair.